Supply Chain Digest Thought Leadership Series

Benchmark Study 2015

Leveraging Supply Chain Data for

Competitive Advantage

Your First Stop for Supply Chain Information

 Table of Contents

Introduction...................................................................................................................................3

About the Study............................................................................................................................4

Survey Demographics..................................................................................................................4

Survey Results.............................................................................................................................6

Key Takeaways from the Data....................................................................................................14

The Path Forward.......................................................................................................................15

About Supply Chain Digest........................................................................................................16

Research Sponsor: Qlik.............................................................................................................17

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Your First Stop for Supply Chain Information
 Across the globe, company CEOs are hearing the same message...
go digital, or go the way of the dinosaur.
Consulting giant McKinsey, for example, recently
wrote that “To stay competitive, companies must
stop experimenting with digital and commit to
transforming themselves into full digital businesses.”
Of course, for most companies a key part of a
transforming into a digital business is creating the
digital supply chain – and the pressure from the top to
do so quickly is ramping up.
A PwC survey earlier this year, for example, found
88% of CEOs globally say that digital technologies
provide “quite high” or “very high” value in terms
of increasing operational efficiency – and that CEOs
also committed to other digital strategies such as
data mining and analysis, boosting their e-innovation
capacity, and improving decision-making.
All this of course begs the question, what does it
mean to become a digital business or digital supply
chain? There is not yet really an accepted definition,
but we know what the key components are: mobility,
the Internet of Things, visibility, the Cloud, Big Data
– and the ability to better leverage the information
the company often already has for insights, analytics,
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Your First Stop for Supply Chain Information
internal and external collaboration, improved
decision-making and more.
In fact, with the explosion of data coming from point
of sale and other demand points, social media, a
rapidly expanding number of connected “things” and
more, the ability to harness that data into actionable
intelligence really may be the defining capability of a
digital business.
And here, things are changing rapidly, with
technology leading the way, moving well past
traditional reporting and even on-line dashboards
(though these are very useful) to flexible, interactive,
user-driven capabilities that take analysis and insight
to entirely new levels – capabilities that are already
providing a digital competitive advantage to a few
supply chain leaders.
As Gartner’s Jorge Lopez recently wrote: “By 2020,
more than seven billion people and businesses,
and at least 30 billion devices, will be connected
to the Internet. With people, businesses and things
communicating, transacting, and even negotiating
 “By
2020, more
with each other, a new world With that in mind, Supply
comes into being – the than seven billion Chain Digest recently
world of digital business.” people and businesses, undertook a significant
survey of supply chain
and at least 30 billion devices,
Lopez continues: professionals to see
“Digital business is will be connected to the Internet. where they stand on the
the creation of new With people, businesses and things opportunities to craft
business designs by these next-generation
communicating, transacting, and even
blurring the digital data management and
and physical worlds. negotiating with each other, a new analytics platforms,
It promises to usher world comes into being – the world the level of capabilities
in an unprecedented companies currently have
of digital business.”
convergence of people, in place, and the priorities
business and things that [Jorge Lopez, Gartner] they are setting over the
disrupts existing business next few years. This report
models – even those born reviews the results of this
of the Internet and e-business survey data and concludes with
eras. What makes digital business a summary of what this means for
different from e-business is the presence improving and digitally transforming the
and integration of things, connected and supply chain.
intelligent, with people and business.”

About the Study

In Q1 of 2015, SCDigest launched a global survey of
our readership around the subject of how companies
are planning to leverage their supply chain data,
including the capabilities they have in place now or
intend to develop over the next few years.
We generated about 200 valid responses, a significant
number, with respondents from around the globe.
Below we provide a detailed look at those responses,
and identify key trends that are currently driving
companies relative to data analysis and tools. We
believe this is the most detailed study of these
practices in the supply chain that the industry has
seen to date.

Survey Demographics
Responses came from a wide variety of roles within
the supply chain, both traditional operations-related
positions, as well as some from supply chain IT.
There was also a wide mix of industries, but the top
five were from consumer goods companies (19.3%),
followed by automotive, industrial or aerospace
(15.2%), transportation and logistics (9.6%), high
tech/consumer electronics (8.1%), and retail
(6.1%). Responses from many other industries, such
as chemicals, medical devices, pharma/bio-tech,
wholesalers, utilities and more, were obtained.

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 Almost 58% of respondents were from the Americas,
primarily the US, but more than 42% were from
outside of Americas, split between the EMEA region
(19.2% of the total population) and Asia-Pac (22.8%).
This represents a more truly global respondent base
than SCDigest typically has for its survey data.
respondents were from companies with more than
$1 billion in annual revenues, and that probably
understates the mix a bit, as some respondents
answered from a divisional or SBU perspective that
might have smaller revenues but be part of a larger
company that has much larger sales.

There was also a nice split by size of companies,

as shown in the figure nearby. More than 44% of

Survey Respondents
28.9%
27.4% by Region

Under
$100 Over
million $1 billion,
less than
17.3%
14.2% $10 billion
12.2%
Over
$101 to $10
$500 $501 billion
million million to
$1 billion

We received responses from great companies across the globe, including the following:

Eaton Solar Turbines Oriflame Cosmetics Axalta Amway

Manfrotto Rexnord Godrej & Boyce Applied Materials Big Lots

Nordam AB Enzymes Osram Daniel Corp Sears

UTC Aerospace Gullbrandsen Johnson & Johnson Philips Healthcare Wegmans Food

MaxamCorp Nuplex Resins Mondelez Seagate Land O Lakes

Honeywell Nike Australia Energizer Suncor Energy Expeditors

Johnsonville
General Electric Colgate Palmolive Bayer HealthCare RS Components
Sausage

Armstrong World Boehringer

Caterpillar Tiger Brands Estes
Industries Ingelheim

McCormick
Toyota Edlyn Foods Siemens Healthcare DB Schenker
& Company

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Your First Stop for Supply Chain Information
 Survey Results
Robustness of Current KPI Reporting Systems

Companies have made sizable investments in time and 29.4% 19.3%

effort over the past two decades or more to develop 8.6% OK Excellent
systems to report on key performance indicators (KPIs)
42.6%
Poor Good
that track a seemingly ever-growing list of supply
chain metrics.

As can be seen, almost 62% of companies say their

traditional KPI systems and capabilities are good or
excellent, indicating this is an area of growing maturity
– and that the real action today is in more advanced
systems, as we’ll explore throughout this report.

The While some companies are still struggling with basic metrics and performance
Bottom Line measurement, excellence here is no longer a differentiator – more advanced
capabilities are now required to gain competitive advantage.

Advanced Analytic Capabilities

While the definition of what makes so-called
“advanced analytics” is far from precise, there is no
question that leading companies are in fact leveraging
data in new and innovative ways to find relationships,
patterns and other insights that improve decision-
making.
Relative to these more advanced capabilities, we
see a drop off from the previous question, with just
25.4% of respondents saying they have good analytic
capabilities and only 10.7% advanced capabilities, as
shown below.

Basic

Very basic
27.9%
Some capabilities, not advanced
36.0%
Good, but not great capabilities
25.4%
Advanced Capabilities
10.7%

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 Supply Chain Data and Analytics Capabilities by Region

In general, we did not find a meaningful level of
difference across the three geographic regions we
targeted. That said, on this question there were some
differences across regions, with Americas companies
claiming to have the most advanced capabilities,
while EMEA companies and Asia-Pac firms having
roughly the same outlook, if somewhat different in
the specific breakdown across the four categories.

Some Capabilities, Good, But Not Advanced

Very Basic
But Not Advanced Great Capabilities Capabilities
Americas 22.8% 36.0% 28.1% 13.2%

EMEA 26.3% 47.4% 23.7% 2.6%

Asia-Pac 44.4% 26.7% 20.0% 8.9%

Knowledge of Supply Chain Analytics in Early Stages

As noted above, there is far from a universal
definition of what defines advanced analytics – and a
lack of knowledge about the subject area in general.
This is not surprising given the relative newness of
these tools in the last few years.
As shown in the graphic below, fewer than 20%
of supply chain managers say they have excellent
High level
of knowledge
knowledge relative to supply chain analytics,
while more than 45% say they have at most basic
knowledge of this subject matter. It interestingly
comes at a time when many companies have pared
back their own operations research departments, but
may now look to expand back in somewhat different
ways relative to data management and analytics.
Low level of
knowledge

19.8% 15.7%
Above average 34.5% Basic knowledge
knowledge 29.9%

The Bottom Line:

While use and knowledge of more advanced supply chain analytics is growing, it is still in its
relatively early stages, with few supply chain managers having deep knowledge of the topic, and
overall capabilities high in just 10% of companies.

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Your First Stop for Supply Chain Information
 What Characterizes Your Approach to Analyzing Supply Chain Data?
A critical difference between traditional KPI
reporting systems and today’s data analytics is that
the traditional approach – scorecarding – provides
a rearview mirror of performance: what happened
yesterday, last week, last month, last quarter, etc.
Modern dashboards, on the other hand, provide a
more real-time view of what is happening right now,
allowing supply chain managers to react to issues and
opportunities as they unfold.
But we are rapidly moving towards an even more
advanced paradigm in which data will be used to
predict future supply chain behaviors and outcomes,
and ultimately prescribe what course to follow to
drive the optimal results.
We are very early in this game. While 23.4% of
respondents indicate they are “aggressively building”
these forward-looking capabilities, 36.5% said they
were just getting started in this direction, and more
than 40% said they were still almost exclusively
backward looking when it comes to data analysis.

Almost exclusively backward looking

40.1%
Just starting to use analytics to identify issues/opportunities
36.5%
Aggressively building capabilities to identify issues/opportunities
23.4%

What is the Potential Value from Analytics that Identify and Predict
Issues/Opportunities?
While few companies are well down the path to characterized the opportunity as “good” - or a full
these forward-looking capabilities, the vast majority 88.3% combined. Only 11% are not that optimistic on
understand the value in doing so. In fact, 36% of the potential here for the supply chain, as shown in
respondents said they see such advanced capabilities the chart nearby.
as an “outstanding opportunity,” while another 52%

Minimal opportunity
2.0%
Some opportunity, but not great
9.6%
Good opportunity
52.3%
Outstanding opportunity
36.0%

The Bottom Line:

At this point in the data and analytics evolution, it is not be surprising the majority of companies are still
focused on a backwards view of performance, or just starting a more forward-focused set of capabilities.
Many have worked hard to develop robust KPI reporting systems, only to find some of that work has to be
rethought in light of today’s capabilities and opportunities to leverage the data in whole new ways.
Becoming a digital business will involve building forward looking capabilities – and the good news is the
vast majority of companies recognize the potential value in getting there.

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Your First Stop for Supply Chain Information
 What is the Opportunity for Big Data in the Supply Chain?
Companies see similar bright opportunities for so better predict and understand demand. Transportation
called “Big Data” in the supply chain. SCDigest data is being leveraged by many companies to better
would argue that just as with advanced analytics, understand how actuals become degraded from
that term is less than precisely defined, and we the original plan, to improve driver safety,
have heard all kinds of analyses lumped do what ifs on potential logistics
under the Big Data umbrella. At the strategy changes, and many other
same time it’s clear that we have examples.
entered a new era.
27.4%
Outstanding
A combined 80.7% of
Retailers, for example, are 53.3% Opportunity companies see either
working hard to connect a Opportunity good or outstanding
Good

variety of data sources – opportunities from use

loyalty program shopping Big Data in the supply
data, web site behavior, 14.2% chain – even if the
Some opportunity
social media interaction but not great path forward is not yet
and more to better understand 5.1%
Minimal Opportunity
completely clear.
what drives shoppers and to

How Hard will Managing All this Data Be?

A key question of course is whether companies will almost overwhelming, while just 13.7% say it is quite
really be able to manage and take advantage of all manageable. The preponderance – 51.8% - are in
this data as it continues to explode – and that’s before between, recognizing the challenges in the amount of
the Internet of Things has really yet become a major data but believing it will be manageable in the end.
force. Trading partners are also increasingly making
supply chain data available, while a company’s ability We would just add that how manageable and useful
to access its own data – such as transportation-related the data is - whether it’s “big” or not – will depend
information – continues to improve. on the tools and processes that are put in place to
leverage it, combined of course with the skill of the
Might this flood of data prove too much to manage? people involved.
We would say the jury is still out on that one. More
than 34% of respondents say the amount of data is 51.8%
Data is
challenging,
but manageable
34.5%
Data is
almost
The Bottom Line overwhelming
13.7%
Even if unsure of the specifics, the vast majority of
Data is
respondents see big supply chain potential in Big Data, and quite
are optimistic that while there will be challenges, the huge manageable
amount of data being generated will be manageable in the end.

We agree – but suspect big differences among companies

depending on investments made, the level of talent to manage
these programs, and the technology path that is chosen.

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Your First Stop for Supply Chain Information
 How Flexible is Your Current System for Users?
We next asked respondents to evaluate their that managers want to be less dependent on IT to
company’s data capabilities in a number of areas. For provide the views and correlations they are looking
each, we provided a scale of 1-7, with seven being the for in the data.
highest and one the lowest. Rather than computing a
simple average, we thought it would be more useful
to group the responses, assigning a score of ‘”low” to Low: 1-2 Medium: 3-5 High: 6-7
1 and 2’s, “medium” to 3 through 5, and ‘”high” to 6 38.6% 53.8% 7.6%
and 7’s.

The first chart looks at data system flexibility and the

extent to which users are empowered to manipulate/
explore the data on their own. As shown below,
clearly few respondents (just 7.6%) believe their
systems have high levels of such flexibility, and that
syncs with general feedback that SCDigest has heard

Data Visualization Capabilities

Data visualization is becoming an increasingly – that brings the data alive and helps managers, their
important capability – meaning new ways in which peers and their bosses visually see the results in a way
data can be displayed, generally in a graphical form that is more meaningful than tables in a spreadsheet
or even basic pie/column type charts.
Low: 1-2 Medium: 3-5 High: 6-7
38.6% 8.6% As shown here, very few companies appear to
52.8%
have made major advances in the data visualization
challenge – and more than one-third of respondents
say their capabilities in this area are currently low.

“...very few companies appear to have made major advances in the data
visualization challenge – and more than one-third of respondents say
their capabilities in this area are currently low.”

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 Risk Analytics and CO2 Emissions Reporting Capabilities

We found similar results for capabilities around these days, we would expect capabilities in both areas
identification of supply chain risk and reporting to grow over the next few years.
on CO2 emissions, both of which had just 6% of
companies saying that they had high capabilities Of course C02 is just one of many measures of
in these areas, though more companies had a Sustainability, and we would expect most companies
medium level of capabilities in the supply chain risk will look to expand capabilities and KPIs across
identification area than they did for CO2 reporting. many measures.
Given their prominence in supply chain thinking
Low: 1-2 Medium: High: 6-7
Low: 1-23-5Medium: 3-5 High: 6-7
Low: 1-2 Medium: High: 6-7
Low: 1-23-5Medium: 3-5 High: 6-7
50.3% 50.3% 6.1%
43.7% 43.7% 6.1%
39.6% 39.6% 6.1%
54.3% 54.3% 6.1% 99 86
99 12
86 12

RISK
CO2

Consistent with other data points from this research, analytics capabilities in
areas such as user self-empowerment, data visualization, supply chain risk
The Bottom Line management and more are still in general very immature.

We believe a high-performance digital supply chain will include these types of

capabilities, meaning companies need to define a roadmap now to get there if
they have not done so already.

Use of Data and Analytics with Trading Partners

Advanced data tools will also foster new and partners. Conversely, almost 54% rely primarily on
improved levels of trading partner collaboration. simply sending trading partners data on their past
How? By enabling a real-time, performance.
forward looking dialog – based
on real data for improved scenario 53.6% With the competition so fierce in every
Share basic
analysis and decision-making – rather metrics industry, supply chain leaders will move
than focusing primarily on past to become more strategic with leading
performance, which characterizes trading partners to make decisions that
most trading partner interactions 38.8% can reduce total supply chain costs,
today. Meetings with improve promotional effectiveness; find
key partner new opportunities to drive revenue gains
based on past data
That opinion is supported by the data, and more.
which shows just 7.7% of companies
have the ability to leverage real- 7.7% Data-driven analysis and “what if”
time data, scenario planning and Real-time capabilities will be central to that future
other capabilities when discussing collaboration collaborative state.
tools
future plans with key trading

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 Areas of Biggest Potential Gains from Improved Data Management and
Analysis Capabilities

We asked respondents to rate a series of potential
benefits on a scale of 1 to 7, with seven being the
highest benefit and one the lowest, as shown in the
graphic below.
All the listed benefits scored highly, each well above
the mid-point average of 3.5, but coming out on top
was “better decision-making,” which really in the
end is the key to all of this, with an average score
of 5.6. Right behind was improved supply chain
agility, followed by “finding hidden supply chain
opportunities.”
We would say the respondents got it just right.

RATING: 7 = highest benefit rating 1 2 3 4 5 6 7

Better Decision-Making 5.6
Improved Agility 5.5
Finding Hidden Opportunities 5.3
Better Internal Visibility/Collaboration 5.2
Reduce Supply Chain Costs 5.2
Management of Trade-Offs 4.9
Risk Reduction 4.9
Improved KPI Achievement 4.8
Better External Visibility/Collaboration 4.8

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 Areas of Greatest Opportunity

Becoming more “forward looking” topped the
list, with an average score of 5.6 on the same 1
to 7 scale. That was followed by “connecting and
relating disparate data sources,” at 5.3, and improved
data visualization, with a score of 5.2. Improving
the “range of KPIs tracked” was the lowest rated
improvement area (though still with a score of 4.3,
well above the mid-point), but again we believe that
this is because many if not most companies have
created very good traditional supply chain metric
systems over the last decade.

RATING: 7 = highest benefit rating 1 2 3 4 5 6 7

Become More Forward Looking 5.6
Connect and Relate Disparate Data Sources 5.3
Data Visualization 5.2
Leverage Big Data 5.1
Drill Down/Relate Data on Fly 5.1
Collaboration Tools 4.9
Level of Flexibility / No IT Help Needed 4.9
Number of Metrics Tracked 4.3
Range of KPIs Tracked 4.3

The Bottom Line

Despite early stages of maturity, companies see significant potential from improvements in data
management and analysis. Not surprisingly, improved supply chain decision-making tops that list,
while similarly becoming more “forward looking” was the number one opportunity identified by
respondents from improved data management and analytics.

The consensus is clear – there is significant potential here to improve supply chain performance
through better data management and analytics.

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 Priority of Making Improvements in Data & Analytic Capabilities
Capping that off, respondents made it very clear that
improvements in this area are a very high supply
chain priority – in part as an element of overall digital
business strategies, as discussed at the beginning of
this report.
Almost 44% of respondents
said such improvements We Are 16.3%
were a “high priority,” Already Doing It
while another 16% said
their companies were High 43.9%
Priority
The Bottom Line
For supply chain leaders, the advanced analytics train has already left the station.
Key Takeaways from the Data
Clearly, the data from our global survey shows that
we are very early in the maturity and deployment of a
series of next generation data analysis tools, but that
the interest is high, and companies understand the
potential value.
In fact, the vast majority of companies sees significant
value in increasing their capabilities in terms of data
and analytics (88% said there is a good or outstanding
opportunity), with similar numbers seeing high
potential for Big Data.
However, very few companies – generally well under
10% - say they are at advanced levels across a number
of more advanced capabilities in this area, such
as user system flexibility and user empowerment,
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“already doing it” in terms of building advanced
data and analytic capabilities – some 60% combined
between the two responses.
Just 3.6% of respondents said such
improvements were a low priority.
As for the 36% that suggest
3.6% Low this is an area of just modest
Priority priority – SCDigest
suggests you may want
36.2% Modest to revisit that thinking.
Priority
data visualization, supply chain risk management
capabilities and more.
At the same time, 16.3% say they have already started
acting on building advanced analytics capabilities –
providing a competitive edge for those that are turning
the potential opportunity into action. Respondents
especially see opportunities in better leveraging data
to become more forward versus backward looking,
correlating data from multiple sources, better data
visualization and managing Big Data.
Advanced analytics will without question be a
cornerstone of creating the digital supply chain – and
the evidence says CEOs are hoping the supply chain
gets there fast.
 The Path Forward
Companies are facing the convergence of several • Provide high levels of data visualization
important mega-trends: capabilities to more powerfully tell the story that
underlies the data
• An explosion of new data sources, including • Enable a company and its trading partners to
social media, the Internet of Things, and inter- jointly view key information and use “what if”
connected supply chains. capabilities to explore opportunities for
• The rise of Big Data and advanced improvement
analytics to drive improved • Make data and analytics
business insight and “While
easily accessible on mobile
decision-making. as always it’s devices
• A growing corporate about people, process
focus on improving The first step to this
and technology, there is a
visibility across the data empowered supply
supply chain and certain binary aspect to this data chain world is to better
beyond to achieve opportunity: either your supply understand the possible,
greater agility and and how leading
chain has some of these more
speed of response to companies are taking
issues and opportunities. advanced BI capabilities or it their data management
doesn’t.” and analytics to new levels
Companies are also across every area of the
increasingly crafting strategies supply chain.
to push more data down to the
point of decision-making, with mobile Reports such as this and others from
technology playing a growing role, as industry analysts are one component
companies want workers to be able easily access the in this education, but here technology vendors,
data they need wherever they are, on the device of generally grouped under the term business
their choice. intelligence (BI) system providers, can also be a
valuable resource. From product demonstrations to
The supply chain of course presents a rich customer cases studies and site visits, SCDigest is
opportunity take advantage of these trends in data confident most companies will be pleasantly surprised
management and analytics, and this survey and by just how far this type of technology has come from
anecdotal evidence (conference presentations, trade leading BI providers.
magazine stories, vendor case studies, etc.) show a
growing number of companies are doing so. They are And here is the thing: while as always it’s about
developing capabilities that: people, process and technology, there is a certain
binary aspect to this data opportunity: either your
• Enable data from multiple sources to be pulled supply chain has some of these more advanced BI
together for a consolidated, holistic view capabilities or it doesn’t. So here, technology really
plays the key role in reaching a more advanced state.
• Allow end users significant flexibility to mine
the data on their own without going to IT for a But people and process of course play key roles as
new report – one key example is the ability to well, and are joined at the hip in many ways. This is
drill down and horizontally as part of root cause especially true because how to best leverage supply
analysis to supply chain issues chain BI is not always simply intuitive – how to gain

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 maximum advantage needs to be defined, in many
instances, with detailed thinking about what data
visibility and analysis are required to make certain
types of decisions.
Some companies have formalized this process in
some areas into what are called “playbooks.” Such
playbooks, for example, might prescribe what to
do in the case of a serious supply disruption: what
information is needed to respond and where that
information can be found.
Once a company understands what is possible today,
it needs to create a vision for supply chain BI and
of course a plan to get there, including building
the business case. Here, BI vendors and industry
consultants can again provide help – they will likely
have had experience doing just that across many
other companies that can be leveraged in your own
company.
About Supply Chain Digest
Supply Chain Digest™ is the industry’s premier
interactive knowledge source, providing timely,
relevant, in-context information. Reaching tens of
thousands of supply chain and logistics decision-
makers each week, our flagship publications - Supply
Chain Digest, Supply Chain Digest –On-Target,
For more information, contact
Supply Chain Digest at:
www.scdigest.com • email: info@scdigest.com
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We know that many companies are moving
aggressively down this supply chain BI path,
as part of an overall digital business strategy or
independently.
In either case, SCDigest strongly believes those not
yet on this journey need to begin soon, with some
sense of urgency. The level of capabilities in supply
chain data management and business intelligence can
clearly deliver competitive advantage – or the reverse
for industry laggards.
Such capabilities will not only provide better
decision-making and agility, they will play a key role
in attracting supply chain talent when candidates
are exposed to advanced tools that will help them
succeed at their jobs.
and The Supply Chain Digest Letter - and web sites
(www.scdigest.com, www.distributiondigest.com. and
TheGreenSupplyChain.com) deliver news, opinions
and information to help end users improve supply
chain processes and find technology solutions.
 Research Sponsor

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